The U.S. and Latin America: A Lost Decade?

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Margaret Daly Hayes is a political scientist and External Relations Advisor at the Inter-American Development Bank in Washington. She is the author of Latin America and the U.S. National Interest. The views presented in this article are personal and should not be construed as representing opinions of the bank.

The 1980s have been difficult years for the countries of Latin America. They have seemed to take one step forward and two steps back on many fronts. The return of democracy to the region has been heartening, but governance has proved difficult. Economically, many call this the lost decade for Latin America. U.S. policy has been helpful in some respects, but notably frustrated, and frustrating, in others. The next few years will be particularly challenging if Latin Americans are to change the pattern of the past.

Fortune looked favorably on Latin America in the 1960s and 1970s, then turned her back in this decade. Economic growth rates averaged six percent for the region in the 1970s but have been minimal in the 1980s, while populations have continued to increase. In 1988 Latin America's gross product grew by less than one percent, and per capita income, down one-and-a-half percent, has shrunk to 1970s levels. Investment is down as well, from 25 percent of regional product a decade ago to only 16 percent in 1987. Inflation is out of control in economies as varied as Brazil, Peru and Nicaragua. Foreign debt stands at $420 billion, compared with less than $100 billion in 1980, and debt service requires $33 billion per year-nearly one-third of the region's export earnings.

As for politics, nearly all Latin American countries replaced military governments with elected civilian governments in this decade. Chile, Haiti, Panama and Paraguay remain the exceptions, and the outlook for democracy in some is uncertain. Even those countries which returned to civilian rule are beset by problems. Balancing social and political aspirations against severely constrained economic realities has proved frustrating. The task of forging streamlined, more efficient and competitive states out of complacent bureaucracies has been daunting. The hoped-for results of unpopular policies seem further off than ever in many countries.

In 1988, the final year of the Reagan Administration, the United States continued with policies of past years. There were few new initiatives because this was an election year in the United States